Jan 15, 2009

Business -Satyam will make profits, but needs working capital: Karnik

NEW DELHI: The government-constituted Satyam board on Wednesday appointed KPMG and Deloitte to recast the accounts of the beleaguered information technology (IT) firm even as efforts are being made to make the company financially viable before any merger or sale options are considered.

Raising funds from equity partners and banks top the existing board's priorities to meet the needs of working capital and to be able to pay salaries to staff on the first of next month. The immediate reconstruction of the accounts, which were fudged for seven years by the promoters, would help the administrators to infuse fresh capital into the company. However, it is not known how soon the fudged balancesheets could be recast.

One of the three directors on the reconstituted Satyam board and former NASSCOM chief Kiran Karnik on Wednesday told TOI that the IT company is still a "very viable organisation" and would make profits in a few months.

He, however, ruled out any bail-out package being considered by the government. "Taking money for the government will send a wrong signal," Karnik said and reiterated that the possibility of the revival of the company was very strong and it could re-emerge stronger on its own with its existing clients backed by a skilled workforce.

"Our only concern is to keep the show going and hold on to the clients and the workers," Karnik said expressing the need of funding as there was not enough money left in the banks before the promoter B Ramalinga Raju confessed to having forged balancesheets to show inflated bank deposits and profits.

The three-member Satyam board, consisting of Karnik, HDFC chairman Deepak Parekh and former SEBI member C Achutan, is likely to be expanded very soon with more directors being appointed by the government in a day or two. According to a Company Law Board decision, the government can appoint up to 10 directors on the Satyam board.

"Definitely, we need more board members and we have conveyed this to the government. It will divide our work and also give us some relief as all of us have our own commitments too," Karnik said while hinting at the possibility of an announcement by the corporate affairs ministry which is supervising the case. * No immediate splitting of Satyam into two entities like it was done with UTI where liabilities remained with one and assets and cash generated went to a new company

* New Satyam board seeks more directors as pressure mounts on existing three

* Govt nominee says IT company is a very viable organisation that would make profit soon and regain its lost stature

* Raising funds from equity partners and banks among short-term options to pay salaries and for other working capital

* No bail-out package from govt as it may tarnish the company image, feels Karnik